U.S. Stock Market

Stocks Gain Ground As Inflation Remains Under Control

Stocks Continue To Move Higher

S&P 500 futures are gaining ground in premarket trading as traders remain optimistic about the new round of stimulus and the success of mass vaccination program.

The world markets are also moving higher as investors prepare for a strong economic recovery in 2021. Fears about new, more infectious strains of coronavirus have decreased, and markets believe that vaccines should be effective against new variants of the virus.

Importantly, markets easily shrugged off South Africa’s decision to halt the rollout of AstraZeneca vaccine which was caused by the country’s worries about its effectivness against the South African strain of the virus.

The general market mood is very bullish so stocks continue to move higher in absence of significant catalysts.

Oil Moves Towards The $59 Level As Crude Inventories Decline

WTI oil managed to settle above the $58 level and moved closer to the $59 level after API Crude Oil Stock Change report indicated that crude inventories declined by 3.5 million barrels.

Inventories continue to decline as world oil output remains limited due to OPEC+ deal while U.S. domestic oil production is stable despite rising prices.

Oil is gaining ground for a ninth trading session in a row so the risk of a pullback is increasing day by day. Meanwhile, oil-related stocks will likely get a boost at the beginning of today’s trading session.

Inflation Is Weaker Than Expected

The U.S. has just provided Inflation Rate and Core Inflation Rate reports. Inflation Rate increased by 1.4% year-over-year in January while analysts expected that it would grow by 1.5%. Meanwhile, Core Inflation Rate also grew by 1.4% compared to analyst consensus which called for growth of 1.5%.

Inflation remains fully under control which indicates that the economy is ready for another big stimulus package. In addition, weaker inflation shows that the Fed will not have to raise rates anytime soon which is bullish for stocks and bearish for the U.S. dollar. The American currency has already started to lose ground after the release of inflation reports, providing support to precious metals like gold and silver.

For a look at all of today’s economic events, check out our economic calendar.